Define the following terms:
a. Recession
b. Mixed economy
c. Transfer payments
d. Progressive taxation
a. A recession is a period of time during which the total output of the economy falls.
b. A mixed economy is one with some public influence over the workings of free markets. There may also be some public ownership mixed in with private property.
c. Transfer payments are sums of money that certain individuals receive as outright grants from the government rather than as payments for services rendered.
d. A tax is progressive if the ratio of taxes to income rises as income rises.
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The free rider problem is a situation in which
(a) effluents such as CFCs combine with ozone and decrease concentrations of that protective chemical. (b) one agent secures benefits that others pay for. (c) there are excessive subsidies given to polluting buses or other forms of mass transit. (d) perfect property rights exist.
Refer to the above figure. If the economy is at E and the government wants to increase aggregate demand to AD3, but the increase in spending only shifts the aggregate demand curve to AD2, then
A) complete crowding out has occurred. B) some crowding out has occurred. C) the increased borrowing caused interest rates to fall. D) the short-run aggregate supply curve is steeper than the figure indicates.
A good synonym for elasticity would be
a. stability b. volatility c. stickiness d. demand e. responsiveness
The law of demand is graphically demonstrated by a(n):
a. perfectly vertical demand curve. b. perfectly horizontal demand curve. c. downward-sloping demand curve. d. upward-sloping demand curve. e. curved demand line.